10 Housing Markets That Could See the Most Change With Falling Mortgage Rates
Written by
Sarah Li Cain
Edited by
Heather Taylor
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Looking to buy a house but not sure if now’s the right time? Considering mortgage rates have been high (especially since 2020), it may feel like you’re on shaky ground wondering if you can afford being a homeowner. After all, a slight drop in rates can save you thousands or dollars (or more) throughout the life of your mortgage.
The promising news is that according to Realtor.com, certain areas of the U.S. could see the most changes in mortgage rates. Their October 2024 data analysis saw several cities that could see these shifts within the next several months.Â
Why only certain cities? Because some areas have higher rates of homeowners who are still paying off their mortgages. For example, you may not see as drastic of a drop in West Virginia because most homeowners don’t have a mortgage. So cities that have the highest amount of homeowners who still have mortgages could see more of an impact.
Cities That Top the List
Here are the top 10 cities with the highest percentage of homeowners who are still paying down their mortgage, in ascending order:
- San Diego
- Indianapolis
- Atlanta
- Seattle
- Baltimore
- Portland, Oregon
- Virginia Beach, Virginia
- Raleigh, North Carolina
- Denver
- Washington, D.C.
Each of these cities have around 70% or more homeowners that still have a mortgage. So if these homeowners can refinance to a much lower rate, you can see how these cities would feel more of a significant impact.
Going further, according to analysis from Realtor.com, around 84% of mortgages are 6% or less. That means those with rates higher than 6% will probably want to refinance when rates finally start to fall. In most cases, you probably won’t see rates as low as what we’ve seen during the height of the pandemic. However, that doesn’t mean you won’t see significant savings.
How Much You Could Save
Say you bought a house for $350,000 in 2019 at a 6.2% interest rate on a 30-year. Your loan balance is currently $326,485 because of the interest payments you’ll need to make in addition to the principal payment.
If you refinance at the same repayment term, but the interest is now 5%, you could save around $391 per month, including any closing costs you may need to pay. Keep in mind that this doesn’t include any homeowners insurance or property taxes you’re on the hook for.
Shopping AroundÂ
When you’re ready to shop around, see if you can get prequalified. Doing so won’t affect your credit score. The good news is that even if you do submit several refinance applications and each lender needs to do a hard credit pull, it may only count as one. That is, as long as you submit your applications close together.
Saving several hundred dollars monthly may be worth your time to shop around lenders once rates start to fall. Even if you’re not living in one of these cities, you personally could see some savings.
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